Industry

IDBI Bank may face capital shortfall in FY19 says CEO

Says strike called by employees totally unacceptable

State-run lender IDBI Bank, which is set to be taken over by the Life Insurance Corporation of India, may face a capital shortfall in the current financial year, its chief executive officer and managing director B. Sriram said in an address to the employees.

“While we have met the capital requirements for 2017-18, we are confronted with the possibility of shortfall in capital requirements in 2018-19,” he said in a communication, which has been reviewed by The Hindu.

He made the comments while announcing the wage revision for the employees for November 2012 to October 2017, which has been approved by the government.

On Tuesday, the lender reported a loss for the seventh straight quarter. The loss widened to ₹2,410 crore due to a higher provision for bad loans. The provision for bad loans alone was ₹4,602.55 crore, as against ₹1,873.21 crore a year earlier

Mr. Sriram said the Q1 results show the ‘massive’ challenge the bank is going to face in the coming days in the areas of capital, non-performing assets, increasing credit costs, credit growth and pressure on margins.

He also expressed his displeasure over a section of the employees having struck work for two days to register their opposition to the LIC deal.

‘Customer has choices’

“In the midst of all this pain, while the bank is searching for faster solutions, it is indeed disheartening that a section of our employees had struck work,” he said. “Today’s customer has several choices and such consequences of the bank’s service would result only in negating the hard work put in by us in acquiring the customer.

“This is totally unacceptable, more so when the bank is facing such difficulties. I expect every employee to put in concerted efforts and be fully responsible in ensuring that there is no disruption in smooth functioning in the bank,” Mr. Sriram said.

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Printable version | Feb 19, 2020 2:11:08 PM | https://www.thehindu.com/business/Industry/idbi-bank-may-face-capital-shortfall-in-fy19-says-ceo/article24697658.ece

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